LUKOIL President's Letter
The LITASCO Group has been responsible for the international trading activities of the LUKOIL Group for the last 8 years and in order to ensure full transparency for both investors and management, all the LUKOIL Group crude oil and products exported from Russia have been handled by the company during this whole period.
LITASCO SA has established subsidiary offices in ten countries, extending our reach around the world from the United States to Europe, the Middle East and Singapore.
In 2008, the LITASCO Group organized the export of over 34 million metric tons of crude oil and 30 million metric tons of petroleum products from the OAO LUKOIL system. The international trading operations of the LITASCO Group enabled the company to market additional 8.2 million metric tons of crude oil and 26 million metric tons of petroleum products sourced from third parties making a total volume of crude and products traded of over 98 million MT.
The acquisition of a 49% share in ISAB refinery (Sicily) has strengthened LUKOIL's market position. Beside the immediate impact of increase in both crude supply and product off-take opportunities for the LITASCO Group, it also enables the company to have a significant position in the very center of the Mediterranean market, which is an important price determining region.
The LITASCO Group's functions include also the international expansion of the Group's trading operations. Third party trading activity in 2008 represented approximately 40 percent of the LITASCO Group's total activity. Trading with third parties allows the LITASCO Group to increase the efficiency of the LUKOIL Group's oil and petroleum products export and enables the company to further expand its international operations. For this reason, the LUKOIL Group's strategy is to increase the scale of its third party trading in our activity mix over the next several years.
Expansion of LITASCO SA's global market share on both sides of the Atlantic Ocean and in the Far East has established it as a major international trading company.
Opening these markets to the LITASCO Group's operations, will ensure that OAO LUKOIL's overall goal of having a true global presence to supply end customers with our products is achieved.
Vagit Alekperov
LUKOIL President